diff --git a/shell/ash.c b/shell/ash.c
index 04ba447b1..7a097c814 100644
--- a/shell/ash.c
+++ b/shell/ash.c
@@ -8960,6 +8960,9 @@ mklocal(char *name)
 			vp->flags |= VSTRFIXED|VTEXTFIXED;
 			if (eq)
 				setvareq(name, 0);
+			else
+				/* "local VAR" unsets VAR: */
+				setvar(name, NULL, 0);
 		}
 	}
 	lvp->vp = vp;
diff --git a/shell/ash_test/ash-misc/local1.right b/shell/ash_test/ash-misc/local1.right
new file mode 100644
index 000000000..a2d121df6
--- /dev/null
+++ b/shell/ash_test/ash-misc/local1.right
@@ -0,0 +1,4 @@
+A1:'A'
+A2:''
+A3:''
+A4:'A'
diff --git a/shell/ash_test/ash-misc/local1.tests b/shell/ash_test/ash-misc/local1.tests
new file mode 100755
index 000000000..b1e675059
--- /dev/null
+++ b/shell/ash_test/ash-misc/local1.tests
@@ -0,0 +1,11 @@
+a=A
+f() {
+	local a
+	# the above line unsets $a
+	echo "A2:'$a'"
+	unset a
+	echo "A3:'$a'"
+}
+echo "A1:'$a'"
+f
+echo "A4:'$a'"